Employer Mandate Confusion

Stanley Feld M.D.,FACP,MACE

Confusion
about any rules or regulations is not good for business, bad for job growth and
bad for the economy.  Large and small
enterprises become cautious and are afraid to spend money on expansion.
Expansion might increase a tax liability without increasing production.

A
few months ago there was a dispute about how many new rules and regulations
have been released by the Obama administration to implement Obamacare.

“Implementation has
also become a bureaucratic nightmare, with some 159 new government agencies,
boards and programs busily enforcing the roughly 20,000 pages of rules and
regulations already associated with this law.”

— Sen.
Mitch McConnell (R-Ky.), on the third anniversary of the law’s passage,
March 22, 2013

The process the McConnell folks used is fairly
simple. They went to the Web site for the Federal Register and
searched for “Affordable Care Act,” the official name for the health-care law.
That turned up 897 documents.

On the Web site, there’s a button that will download
the documents to an Excel spreadsheet (CVS/excel). Then you use the sum feature
on Excel to add up the pages and presto, you end with 20,202 pages. These were
then printed out and duly stacked in a pile.

Mitch
McConnell might be way off in his calculation. The rules and regulations are
reported in the small print Federal Register. It is possible as many as 40,000
rules and regulations have been published. All of the rules and regulations for
Obamacare will not have been written by January 1, 2014. 

The
cost of the writing of the rules and regulations, the cost of the formation of
new agencies formation, and the cost of implementation have not been discussed.

Rules
and regulations tend to be open to misinterpretation, conflict, lawsuits and
lack of enforcement.

An
increase in rules and regulations leads to more confusion and conflict. Some
rules contradict other rules. This results in greater inefficiency and more not
less costs.

Our
healthcare system can ill afford more non added value expenses.

The
IRS is going to be in control of enforcing the “Employer Manadate.” Many of the
rules and regulations have been written. However, many of the IRS’s rules and
regulations are not clear.

I
have written about employers decreasing the number of hours employees are
permitted to work in order to avoid the penalty “tax”
of not providing healthcare insurance for full time workers.

Seventy
seven percent of the “job growth” in the past few months has been part time
employment growth. The Obama administration has consistently denied this is
true despite the Bureau of Labor statistic reports.

What
is part time employment? It has been defined in Obamacare as an employee
working less than 30 hours a week.

“Just to understand how the penalty applies practically requires
a flow chart. But as the Internal
Revenue Service has tried to interpret the mandate, the
agency and the businesses and employees affected by the mandate are discovering
that it is even more challenging than it reads.”

Answers to questions by
the I.R.S. have generated even more questions. Confusion mounts as more rules
and regulations are generated.

A big question has
surfaced. How does an employer determine whether employees whose hours fluctuate
should be offered insurance or pay a penalty “tax”?

Obamacare sets that
threshold at 30 hours per week. Many companies schedule some of their work
force on variable hours. An employee might work 25 hours one week and 33 hours
another week. 

In its preliminary
rules, released late last year,
the I.R.S. devised an approach to the problem of the variable-hour employee
that it calls the “look-back measurement method.”

The I.R.S regulations
would allow an employer to choose a measurement period of three months to a
year in which to average the employee’s weekly hours.

The measurement period
would then be followed by a stability period of a year for a total of two
years.

Is anyone following this?

If an employee’s schedule
averaged out to full time (over 30 hours a week) during the measurement period,
then the company would be obliged to offer health insurance in the stability
period or pay a penalty.

The new measurement period
would begin immediately after the old one ended. The process of measurement and
stability periods would begin again.

 If the company anticipates that a new hire
will work full-time (over 30 hours a week), it must offer insurance by the
start of the fourth month on the job.

 Why not offer insurance immediately on hiring
the person? Is this not confusing?

 To make things more confusing, what happens if
an employee goes from full time to part-time?
The rules were unclear. “Do you get to keep your coverage?”

The I.R.S. took the
position that the employee would keep the coverage through the end of the
stability period.

If it turned out that the
worker still managed to average a full-time schedule, which would be possible,
if he or she made the switch late in the period. The company would have to
offer insurance in the next stability period as well or face the penalty.

A full-time employee who was
switched to part-time in August, before open enrollment in October, would be
entitled to an additional 16 months of insurance coverage.

Employers have figured out
they should fire the employee and avoid the penalty or the insurance coverage.
This is not good for job creation or the economy.

The law and its rules are
encouraging these actions.

The rule also penalizes an
employee who is switched from part time to full time employment. The employee
has to wait at least a year before the employer must offer that employee
insurance coverage rather than by the fourth month.

“Measurement and stability
periods should be used to infer a status of variable-hour employees only,” 

“Once an employee is no longer a variable-hour employee and is
in a full-time position, he or she should be offered coverage within, at most,
four calendar months.”

Is all this confusing? You
bet. Just visualize the cost of the mountain of paper work and reports.

Is all of this cost
effective? No!

This represents a tiny
fraction of the rules and regulations by the Affordable Care Act (Obamacare) that
are causing confusion.

The more confused one gets
the less one wants to participation.

The only option left is a government
take over of the healthcare system. It wouldn’t be bad except for the fact that
America cannot afford it, and the government could not implement it without a
terrible cost to society.

It would result in
rationing of care and a decrease in access to care. The only solution is for
consumers to be responsible for their own care and control their own healthcare
dollars.

 The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone

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